No. _________
d
IN THE
Supreme Court of the United States
ALAVI FOUNDATION and 650 FIFTH AVENUE COMPANY,
—v.—
Petitioners,
JASON KIRSCHENBAUM, et al.,
Respondents.
ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
DANIEL S. RUZUMNA
Counsel of Record
MUHAMMAD U. FARIDI
DIANA M. CONNER
PATTERSON BELKNAP WEBB
& TYLER LLP
1133 Avenue of the Americas
New York, New York 10036
(212) 336-2000
[email protected]
Attorneys for Petitioners
i
QUESTION PRESENTED
The Terrorism Risk Insurance Act of 2002,
Pub. L. No. 107-297, 116 Stat. 2322, 2337 (codified at
28 U.S.C. § 1610 note), authorizes a judgment
creditor holding an unsatisfied judgment against a
foreign state designated as a state sponsor of
terrorism to enforce that judgment by executing
against and attaching blocked assets belonging to an
“agency or instrumentality” of that foreign state.
This case presents the question whether an
individual or entity need only provide “material
services” to a foreign state sponsor of terrorism in
order to qualify as its “agency or instrumentality,” or
whether the individual or entity must satisfy a
stricter definition based on majority ownership or
control by the foreign state, such as the definition of
“agency or instrumentality” set forth in the Foreign
Sovereign Immunities Act.
ii
PARTIES TO THE PROCEEDING
The parties to the proceedings are as follows:
Alavi Foundation and 650 Fifth Avenue Company,
Petitioners
Jason Kirschenbaum, Isabelle Kirschenbaum, on her
own behalf and as Executrix of the Estate of Martin
Kirschenbaum, Joshua Kirschenbaum, David
Kirschenbaum, Danielle Teitlebaum, Respondents
Anna Beer, Harry Beer, on his own behalf and as
Administrator of the Estate of Alan Beer, Estelle
Carroll, Phyllis Maisel, Respondents
Steven M. Greenbaum, in his personal capacity and
as administrator of the Estate of Judith (Shoshana)
Lillian Greenbaum, Alan Hayman, Shirlee Hayman,
Respondents
Carlos Acosta, Maria Acosta, Tova Ettinger, Irving
Franklin, in his personal capacity and as personal
representative of the estate of Irma Franklin,
Baruch Kahane, Libby Kahane, in her personal
capacity and as Administratrix of the Estate of Meir
Kahane, Ethel J. Griffin, as Public Administrator of
the County of New York and Administratrix of the
Estate of Binyamin Kahane, Norman Kahane, in his
personal capacity and as Executor of the Estate of
Sonia Kahane, Ciporah Kaplan, Respondents
Edwena R. Hegna, Executrix of the Estate of Charles
Hegna, Steven A. Hegna, Lynn Marie Hegna Moore,
Craig M. Hegna, Paul B. Hegna, Respondents
Terry Abbott, John Robert Allman, Ronny Kent
Bates, James Baynard, Jess W. Beamon, Alvin
Burton Belmer, Richard D. Blankenship, John W.
Blocker, Joseph John Boccia Jr., Leon Bohannon,
iii
John Bonk Jr., Jeffrey Joseph Boulos, John Norman
Boyett, William Burley, Paul Callahan, Mecot
Camara, Bradley Campus, Johnnie Ceasar, Robert
Allen Conley, Charles Dennis Cook, Johnny Len
Copeland, David Cosner, Kevin Coulman, Rick
Crudale, Russell Cyzick, Michael Devlin, Nathaniel
Dorsey, Timothy Dunnigan, Bryan Earle, Danny R.
Estes, Richard Andrew Fluegel, Michael D. Fulcher,
Sean Gallagher, George Gangur, Randall Garcia,
Harold
Ghumm,
Timothy
Giblin,
Michael
Gorchinski, Richard Gordon, Davin M. Green,
Thomas Hairston, Michael Haskell, Mark Anthony
Helms, Stanley G. Hester, Donald Wayne Hildreth,
Richard Holberton, Dr. John Hudson, Maurice
Edward Hukill, Edward Iacovino Jr., Paul Innocenzi
III, James Jackowski, Jeffrey Wilbur James,
Nathaniel Walter Jenkins, Edward Anthony
Johnston, Steven Jones, Thomas Adrian Julian,
Thomas Keown, Daniel Kluck, James C. Knipple,
Freas H. Kreischer III, Keith Laise, James Langon
IV, Michael Scott LaRiviere, Steven LaRiviere,
Richard Lemnah, Joseph R. (“Joel”) Livingston III,
Paul D. Lyon Jr., John Macroglou, Samuel Maitland
Jr., Charlie Robert Martin, David Massa, John
McCall, James E. McDonough, Timothy R.
McMahon, Richard Menkins II, Ronald Meurer,
Joseph Peter Milano, Joseph Moore, Harry Douglas
Myers, David Nairn, John Arne Olson, Joseph Albert
Owens, Connie Ray Page, Ulysses Gregory Parker,
John L. Pearson, Thomas S. Perron, John Arthur
Phillips Jr., William Roy Pollard, Victor Mark
Prevatt, James Price, Patrick Kerry Prindeville,
Diomedes J. Quirante, Warren Richardson, Louis J.
Rotondo, Michael Caleb Sauls, Charles Jeffrey
Schnorf, Scott Lee Schultz, Peter Scialabba, Gary
Randall Scott, Thomas Alan Shipp, Jerryl
iv
Shropshire, Larry H. Simpson Jr., Kirk Hall Smith,
Thomas Gerard Smith, Vincent Smith, William Scott
Sommerhof, Stephen Eugene Spencer, William
Stelpflug, Horace Renardo (“Ricky”) Stephens Jr.,
Craig Stockton, Jeffrey Stokes, Eric D. Sturghill,
Devon Sundar, Thomas Paul Thorstad, Stephen
Tingley, Donald H. Vallone Jr., Eric Glenn
Washington, Dwayne Wigglesworth, Rodney J.
Williams, Scipio Williams Jr., Johnny Adam
Williamson, William Ellis Winter, Donald Elberan
Woollett, Craig Wyche, Jeffrey D. Young, Marvin
Albright, Pablo Arroyo, Anthony Banks, Rodney
Darrell Burnette, Frank Comes Jr., Glenn Dolphin,
Frederick Daniel Eaves, Charles Frye, Truman Dale
Garner, Larry Gerlach, John Hlywiak, Orval Hunt,
Joseph P. Jacobs, Brian Kirkpatrick, Burnham
Matthews, Timothy Mitchell, Lovelle “Darrell”
Moore, Jeffrey Nashton, John Oliver, Paul Rivers,
Stephen Russell, Dana Spaulding, Craig Joseph
Swinson, Michael Toma, Danny Wheeler, Thomas D.
Young, Lilla Woollett Abbey, James Abbott, Mary
Abbott (Estate Of), Elizabeth Adams, Eileen
Prindeville Ahlquist, Miralda (Judith Maitland)
Alarcon, Anne Allman, Robert Allman, Theodore
Allman (Estate Of), Dianne Margaret (“Maggie”)
Allman, Margaret E. Alvarez, Kimberly F. Angus,
Donnie Bates, Johnny Bates, Laura Bates, Margie
Bates, Monty Bates, Thomas Bates Jr., Thomas C.
Bates Sr., Mary E. Baumgartner, Anthony Baynard,
Barry Baynard, Emerson Baynard, Philip Baynard,
Thomasine Baynard, Timothy Baynard, Wayne
Baynard, Stephen Baynard, Anna Beard, Mary Ann
Beck, Alue Belmer, Annette Belmer, Clarence
Belmer, Colby Keith Belmer, Denise Belmer, Donna
Belmer, Faye Belmer, Kenneth Belmer, Luddie
Belmer, Shawn Biellow, Mary Frances Black,
v
Donald Blankenship Jr., Donald Blankenship Sr.,
Mary Blankenship (Estate Of), Alice Blocker,
Douglas Blocker, John R. Blocker, Robert Blocker,
James Boccia, Joseph Boccia Sr., Patricia Boccia,
Raymond Boccia, Richard Boccia, Ronnie (Veronica)
Boccia, Leticia Boddie, Angela Bohannon, Anthony
Bohannon, Carrie Bohannon, David Bohannon, Edna
Bohannon, Leon Bohannon Sr., Ricki Bohannon,
Billie Jean Bolinger, Joseph Boulos, Lydia Boulos,
Marie Boulos, Rebecca Bowler, Lavon Boyett,
Norman E. Boyett Jr. (Estate Of), Theresa U. Roth
Boyett, William A. Boyett, Susan Schnorf Breeden,
Damion Briscoe, Christine Brown, Rosanne
Brunette, Mary Lynn Buckner, Claude Burley
(Estate Of), William Douglas Burley (Estate Of),
Myra Burley, Kathleen Calabro, Rachel Caldera,
Avenell Callahan, Michael Callahan, Patricia (Patsy
Ann) Calloway, Elisa Rock Camara, Theresa Riggs
Camara, Candace Campbell, Clare Campus, Elaine
Capobianco, Florene Martin Carter, Phyllis A. Cash,
Theresa Catano, Bruce Ceasar, Franklin Ceasar,
Fredrick Ceasar, Robbie Nell Ceasar, Sybil Ceasar,
Christine Devlin Cecca, Tammy Chapman, James
Cherry, Sonia Cherry, Adele H. Chios, Jana M.
Christian, Sharon Rose Christian, Susan Ciupaska,
Leshune Stokes Clark, Rosemary Clark, Mary Ann
Cobble, Karen Shipp Collard, Jennifer Collier, Melia
Winter Collier, Deborah M. Coltrane, James N.
Conley Jr., Roberta Li Conley, Charles F. Cook,
Elizabeth A. Cook, Mary A. Cook (Estate Of), Alan
Tracy Copeland, Betty Copeland, Donald Copeland,
Blanche Corry, Harold Cosner, Jeffrey Cosner,
Leanna Cosner, Marva Lynn Cosner (Estate Of),
Cheryl Cossaboom, Bryan Thomas Coulman,
Christopher J. Coulman, Dennis P. Coulman,
Lorraine M. Coulman, Robert D. Coulman, Robert
vi
Louis Coulman, Charlita Martin Covington, Amanda
Crouch, Marie Crudale, Eugene Cyzick, Lynn
Dallachie, Anne Deal, Lynn Smith Derbyshire,
Theresa Desjardins, Christine Devlin, Daniel Devlin,
Gabrielle (Colleen) Devlin, Richard Devlin, Sean
Devlin, Rosalie Donahue (Milano), Ashley Doray,
Rebecca Doss, Chester Dunnigan, Elizabeth Ann
Dunnigan, Michael Dunnigan, William Dunnigan,
Claudine Dunnigan, Janice Thorstad Edquist, Mary
Ruth Ervin, Barbara Estes, Charles Estes, Frank
Estes, Lori Fansler, Angela Dawn Farthing,
Arlington Ferguson, Hilton Ferguson, Linda
Sandback Fish, Nancy Brocksbank Fox, Tia Fox,
Tammy Freshour, Ruby Fulcher, Barbara Gallagher,
Brian Gallagher, James Gallagher (Estate Of),
James Gallagher Jr., Kevin Gallagher, Michael
Gallagher, Dimitri Gangur, Mary Gangur, Jess
Garcia, Ronald Garcia, Roxanne Garcia, Russell
Garcia, Violet Garcia, Suzanne Perron Garza,
Jeanne Gattegno, Arlene Ghumm, Ashley Ghumm,
Bill Ghumm, Edward Ghumm, Hildegard Ghumm,
Jedaiah Ghumm (Estate Of), Jesse Ghumm, Leroy
Ghumm, Moronica Ghumm, Donald Giblin, Jeanne
Giblin, Michael Giblin, Tiffany Giblin, Valerie
Giblin, William Giblin, Thad Gilford-Smith, Rebecca
Gintonio, Dawn Goff, Christina Gorchinski, Judy
Gorchinski, Kevin Gorchinski, Valerie Gorchinski,
Alice Gordon, Joseph Gordon, Linda Gordon, Norris
Gordon (Estate Of), Paul Gordon, Andrea Grant,
Deborah Graves, Deborah Green, Liberty Quirante
Gregg, Alex Griffin, Catherine E. Grimsley, Megan
Gummer, Lyda Woollett Guz, Darlene Hairston,
Tara Hanrahan, Mary Clyde Hart, Brenda Haskill,
Jeffrey Haskell, Kathleen S. Hedge, Christopher
Todd Helms, Marvin R. Helms, Doris Hester, Clifton
Hildreth, Julia Hildreth, Mary Ann Hildreth,
vii
Michael Wayne Hildreth, Sharon A. Hilton, Donald
Holberton, Patricia Lee Holberton, Thomas
Holberton, Tangie Hollifield, Debra Horner,
Elizabeth House, Joyce A. Houston, Tammy Camara
Howell, Lisa H. Hudson, Lorenzo Hudson, Lucy
Hudson, Ruth Hudson, Samuel Hudson (Estate Of),
William J. Hudson, Susan Thorstad Hugis (Estate
Of), Nancy Tingley Hurlburt, Cynthia Perron
Hurston, Edward Iacovino Sr. (Estate Of), Elizabeth
Iacovino, Deborah Innocenzi, Kristin Innocenzi,
Mark Innocenzi, Paul Innocenzi IV, Bernadette
Jaccom, John Jackowski Jr., John Jackowski
Sr.,Victoria Jacobus, Elaine James, Nathalie C.
Jenkins, Stephen Jenkins, Rebecca Jewett, Linda
Martin Johnson, Ray Johnson, Rennitta Stokes
Johnson, Sherry Johnson, Charles Johnston, Edwin
Johnston, Mary Ann Johnston, Zandra LaRiviere
Johnston, Alicia Jones, Corene Martin Jones, Kia
Briscoe Jones, Mark Jones, Ollie Jones, Sandra D.
Jones, Synovure Jones (Estate Of), Robin Copeland
Jordan, Susan Scott Jordan, Joyce Julian, Karl
Julian, Nada Jurist, Adam Keown, Bobby Keown Jr.,
Bobby Keown Sr., Darren Keown, William Keown,
Mary Joe Kirker, Kelly Kluck, Michael Kluck, John
D. Knipple (Estate Of), John R. Knipple, Pauline
Knipple (Estate Of), Shirley L. Knox, Doreen
Kreischer, Freas H. Kreischer Jr., Cynthia D. Lake,
Wendy L. Lange, James Langon III, Eugene
LaRiviere, Janet LaRiviere, John M. LaRiviere,
Lesley LaRiviere, Michael LaRiviere, Nancy
LaRiviere, Richard LaRiviere, Richard G. LaRiviere
(Estate Of), Robert LaRiviere, William LaRiviere,
Cathy L. Lawton, Heidi Crudale Legault, Clarence
Lemnah (Estate Of), Etta Lemnah, Fay Lemnah,
Harold Lemnah, Marlys Lemnah, Robert Lemnah,
Ronald Lemnah, Annette R. Livingston, Joseph R.
viii
Livingston IV, Joseph R. Livingston Jr. (Estate Of),
Robin M. Lynch, Earl Lyon, Francisco Lyon, June
Lyon, Maria Lyon, Paul D. Lyon Sr., Valerie Lyon,
Heather Macroglou, Kathleen Devlin Mahoney,
Kenty Maitland, Leysnal Maitland, Samuel
Maitland Sr., Shirla Maitland, Virginia Boccia
Marshall, John Martin, Pacita Martin, Renerio
Martin, Ruby Martin, Shirley Martin, Mary Mason,
Cristina Massa, Edmund Massa, Joao (“John”)
Massa, Jose (“Joe”) Massa, Manuel Massa Jr.,
Ramiro Massa, Mary McCall, Thomas Mccall (Estate
Of), Valerie Mccall, Gail McDermott, Julia A.
McFarlin, George McMahon, Michael McMahon,
Patty McPhee, Darren Menkins, Gregory Menkins,
Margaret Menkins, Richard H. Menkins, Jay T.
Meurer, John Meurer, John Thomas Meurer, Mary
Lou Meurer, Michael Meurer, Penny Meyer, Angela
Milano, Peter Milano Jr., Earline Miller, Henry
Miller, Patricia Miller, Helen Montgomery, Betty
Moore, Harry Moore, Kimberly Moore, Mary Moore,
Melissa Lea Moore, Michael Moore (Estate Of),
Elizabeth Phillips Moy, Debra Myers, Geneva Myers,
Harry A. Myers, Billie Ann Nairn, Campbell J.
Nairn III, Campbell J. Nairn Jr. (Estate Of), William
P. Nairn, Richard Norfleet, Deborah O’Connor, Pearl
Olaniji, Bertha Olson (Estate Of), Karen L. Olson,
Randal D. Olson, Roger S. Olson, Ronald J. Olson,
Sigurd Olson (Estate Of), David Owens, Deanna
Owens, Frances Owens, James Owens (Estate Of),
Steven Owens, Connie Mack Page, Judith K. Page,
Lisa Menkins Palmer, Geraldine Paolozzi, Maureen
Pare, Henry James Parker, Sharon Parker, Helen M.
Pearson, John L. Pearson Jr., Sonia Pearson, Brett
Perron, Deborah Jean Perron, Michelle Perron,
Ronald R. Perron, Muriel Persky, Deborah D.
Peterson, Sharon Conley Petry, Sandra Petrick,
ix
Donna Vallone Phelps, Harold Phillips, John Arthur
Phillips Sr., Donna Tingley Plickys, Margaret Aileen
Pollard, Stacey Yvonne Pollard, Lee Hollan Prevatt,
Victor Thornton Prevatt, John Price, Joseph Price,
Barbara D. Prindeville (Estate Of), Kathleen Tara
Prindeville, Michael Prindeville, Paul Prindeville,
Sean Prindeville, Belinda J. Quirante, Edgar
Quirante, Godofredo Quirante (Estate Of), Milton
Quirante, Sabrina Quirante, Susan Ray, Laura M.
Reininger, Alan Richardson, Beatrice Richardson,
Clarence Richardson, Eric Richardson, Lynette
Richardson,
Vanessa
Richardson,
Philiece
Richardson-Mills, Melrose Ricks, Belinda Quirante
Riva, Barbara Rockwell, Linda Rooney, Tara Smith
Rose, Tammi Ruark, Juliana Rudkowski, Marie
Mcmahon Russell, Alicia Lynn Sanchez, Andrew
Sauls, Henry Caleb Sauls, Riley A. Sauls, Margaret
Medler Schnorf, Richard Schnorf, Richard Schnorf,
Robert Schnorf, Beverly Schultz, Dennis James
Schultz, Dennis Ray Schultz, Frank Scialabba,
Jacqueline Scialabba, Samuel Scott Scialabba, Jon
Christopher Scott, Kevin James Scott, Larry L. Scott
(Estate Of), Mary Ann Scott, Sheria Scott, Stephen
Allen Scott, Jacklyn Seguerra, Bryan Richard Shipp,
James David Shipp, Janice Shipp, Maurice Shipp,
Pauline Shipp, Raymond Dennis Shipp, Russell
Shipp, Susan J. Sinsioco, Ana Smith-Ward, Angela
Josephine Smith (Estate Of), Bobbie Ann Smith,
Cynthia Smith, Donna Marie Smith, Erma Smith,
Holly Smith, Ian Smith, Janet Smith, Joseph K.
Smith III, Joseph K. Smith Jr., Keith Smith, Kelly
B. Smith, Shirley L. Smith, Tadgh Smith, Terrence
Smith, Timothy B. Smith, Jocelyn J. Sommerhof,
John Sommerhof, William J. Sommerhof, Douglas
Spencer, Christy Williford Stelpflug, Joseph
Stelpflug, Kathy Nathan Stelpflug, Laura Barfield
x
Stelpflug, Peggy Stelpflug, William Stelpflug, Horace
Stephens Sr., Joyce Stephens, Keith Stephens, Dona
Stockton, Donald Stockton (Estate Of), Richard
Stockton, Irene Stokes, Nelson Stokes Jr., Nelson
Stokes Sr. (Estate Of), Robert Stokes, Gwenn StokesGraham, Marcus D. Sturghill, Marcus L. Sturghill
Jr., Nakeisha Lynn Sturghill, Doreen Sundar,
Margaret Tella, Susan L. Terlson, Mary Ellen
Thompson, Adam Thorstad, Barbara Thorstad,
James Thorstad Jr., James Thorstad Sr., John
Thorstad, Ryan Thorstad, Betty Ann Thurman,
Barbara Tingley, Richard L. Tingley, Russell
Tingley, Keysha Tolliver, Mary Ann Turek, Karen
Valenti, Anthony Vallone, Donald H. Vallone,
Timothy Vallone, Leona Mae Vargas, Denise Voyles,
Ila Wallace, Kathryn Thorstad Wallace, Richard J.
Wallace, Barbara Thorstad Warwick, Linda
Washington, Vancine Washington, Kenneth Watson,
Diane Whitener, Daryl Wigglesworth, Darrin A.
Wigglesworth,
Henry
Wigglesworth,
Mark
Wigglesworth,
Robyn
Wigglesworth,
Sandra
Wigglesworth, Shawn Wigglesworth, Dianne Stokes
Williams, Gussie Martin Williams, Janet Williams,
Johnny Williams, Rhonda Williams, Ronald
Williams, Ruth Williams, Scipio J. Williams, Wesley
Williams,
Delma
Williams-Edwards,
Tony
Williamson, Jewelene Williamson, Michael Winter,
Barbara Wiseman, Phyllis Woodford, Joyce Woodle,
Beverly Woollett, Paul Woollett, Melvina Stokes
Wright, Patricia Wright, Glenn Wyche, John Wyche,
John F. Young, John W. Young, Judith Carol Young,
Sandra Rhodes Young, Joanne Zimmerman, Stephen
Thomas Zone, Patricia Thorstad Zosso, Jamaal
Muata Ali, Margaret Angeloni, Jesus Arroyo,
Milagros Arroyo, Olympia Carletta, Kimberly
Carpenter, Joan Comes, Patrick Comes, Christopher
xi
Comes, Frank Comes Sr., Deborah Crawford,
Barbara Davis, Alice Warren Franklin, Patricia
Gerlach, Travis Gerlach, Megan Gerlach, Arminda
Hernandez, Margaret Hlywiak, Peter Hlywiak Jr.,
Peter Hlywiak Sr., Paul Hlywiak, Joseph Hlywiak,
Cynthia Lou Hunt, Rosa Ibarro, Andrew Scott
Jacobs, Daniel Joseph Jacobs, Danita Jacobs,
Kathleen Kirkpatrick, Grace Lewis, Lisa Magnotti,
Wendy Mitchell, James Otis Moore (Estate Of),
Johnney S. Moore (Estate Of), Marvin S. Moore, Alie
Mae Moore, Jonnie Mae Moore-Jones, Alex W.
Nashton (Estate Of), Paul Oliver, Riley Oliver,
Michael John Oliver, Ashley E. Oliver, Patrick S.
Oliver, Kayley Oliver, Tanya Russell, Wanda
Russell, Jason Russell, Clydia Shaver, Scott
Spaulding, Cecilia Stanley, Mary Stilpen, Kelly
Swank, Kenneth J. Swinson (Estate Of), Ingrid M.
Swinson (Estate Of), Daniel Swinson, William
Swinson, Dawn Swinson, Teresa Swinson, Bronzell
Warren, Jessica Watson, Audrey Webb, Jonathan
Wheeler, Benjamin Wheeler, Marlis “Molly” Wheeler
(Estate Of), Kerry Wheeler, Andrew Wheeler,
Brenda June Wheeler, Jill Wold, Nora Young (Estate
Of), James Young, Robert Young (Estate Of),
Respondents
The Estate of Michael Heiser, Gary Heiser, Francis
Heiser, The Estate of Leland Timothy Haun, Ibis S.
Haun, Milagritos Perez-Dalis, Senator Haun, The
Estate of Justin R. Wood, Richard W. Wood,
Kathleen M. Wood, Shawn M. Wood, The Estate of
Earl F. Cartrette Jr., Denise M. Eichstaedt, Anthony
W. Cartrette, Lewis W. Cartrette, The Estate of
Brian Mcveigh, Sandra M. Wetmore, James V.
Wetmore, The Estate of Millard D. Campbell, Marie
R. Campbell, Bessie A. Campbell, The Estate of
xii
Kevin J. Johnson, Shyrl L. Johnson, Che G. Colson,
Kevin Johnson Jr., Nicholas A. Johnson, Laura E.
Johnson, Bruce Johnson, The Estate of Joseph E.
Rimkus, Bridget Brooks, James R. Rimkus, Anne M.
Rimkus, The Estate of Brent E. Marthaler, Katie L.
Marthaler, Sharon Marthaler, Herman C. Marthaler
Iii, Mathew Marthaler, Kirk Marthaler, The Estate
of Thanh Van Nguyen, Christopher R. Nguyen, The
Estate of Joshua E. Woody, Dawn Woody, Bernadine
R. Beekman, George M. Beekman, Tracy M. Smith,
Jonica L. Woody, Timothy Woody, The Estate of
Peter J. Morgera, Michael Morgera, Thomas
Morgera, The Estate of Kendall Kitson Jr., Nancy R.
Kitson, Kendall K. Kitson, Steve K. Kitson, Nancy A.
Kitson, The Estate of Christopher Adams, Catherine
Adams, John E. Adams, Patrick D. Adams, Michael
T. Adams, Daniel Adams, Mary Young, Elizabeth
Wolf, William Adams, The Estate of Christopher
Lester, Cecil H. Lester Jr., Judy Lester, Cecil H.
Lester Jr., Jessica F. Lester, The Estate of Jeremy A.
Taylor, Lawrence E. Taylor, Vicki L. Taylor, Starlina
D. Taylor, The Estate of Patrick P. Fennig,
Thaddeus C. Fennig, Catherine Fennig, Paul D.
Fening, Mark Fening, Respondents
Fiona Havlish, individually and on behalf of the
Estate of Donald J. Havlish Jr., Donald Havlish Sr.,
Susan Conklin, William Havlish, Tara Bane,
individually and on behalf of the Estate of Michael
A. Bane, Donald Bane, Christina Bane-Hayes,
Krystyna Boryczewski, individually and on behalf of
the Estate of Martin Boryczewski, Estate of Michael
Boryczewski,
Julia
Boryczewski,
Michele
Boryczewski, Grace Kneski, individually and on
behalf of the Estate of Steven Cafiero, Richard A.
Caproni, individually and on behalf of the Estate of
xiii
Richard M. Caproni, Dolores Caproni, Christopher
Caproni, Michael Caproni, Lisa Caproni-Brown,
Clara Chirchirillo, individually and on behalf of the
Estate of Peter Chirchirillo, Livia Chirchirillo,
Catherine Deblieck, William Coale, individually and
on behalf of the Estate of Jeffrey Coale, Frances
Coffey, individually and on behalf of the Estates of
Daniel M. Coffey and Jason Coffey, Daniel D. Coffey,
M.D., Kevin M. Coffey, The Estate of Jeffrey
Collman, Dwayne W. Collman, Brian Collman,
Charles Collman, Brenda Sorenson, Loisanne Diehl,
individually and on behalf of the Estate of Michael
Diehl, Morris Dorf, individually and on behalf of the
Estate of Stephen Dorf, Michelle Dorf, Anne Marie
Dorf, Robert Dorf, Joseph Dorf, Linda Sammut,
Corazon Fernandez, individually and on behalf of
the Estate of Judy Fernandez, Maria Regina
Merwin, individually and on behalf of the Estate of
Ronald
Gamboa,
Grace
Parkinson-Godshalk,
individually and on behalf of the Estate of William
R. Godshalk, Tina Grazioso, individually and on
behalf of the Estate of John Grazioso, Jin Liu,
individually and on behalf of the Estate of Liming
Gu, Alan Gu, Maureen Halvorson, individually and
on behalf of the Estate of James D. Halvorson, Marie
Ann Paprocki, individually and on behalf of the
Estate of Dennis Lavelle, Roni Levine, individually
and on behalf of the Estate of Robert Levine,
Teresanne Lostrangio, individually and on behalf of
the Estate of Joseph Lostrangio, Margaret Mauro,
individually and on behalf of the Estate of Dorothy
Mauro, Ramon Melendez, individually and on behalf
of the Estate of Mary Melendez, Patricia Milano,
individually and on behalf of the Estate of Peter T.
Milano, Ivy Moreno, individually and on behalf of
the Estate of Yvette Nichole Moreno, Joanne Lovett,
xiv
individually and on behalf of the Estate of Brian
Nunez, Estate of Vincent A. Ognibene, individually
and on behalf of the Estate of Philip Paul Ognibene,
Christine Papasso, individually and on behalf of the
Estate of Salvatore T. Papasso, Patricia J. Perry,
individually and on behalf of the Estate of John
William Perry, Rodney Ratchford, individually and
on behalf of the Estate of Marsha Dianah Ratchford,
Rodney M. Ratchford, Marshee R. Ratchford, Rodney
Ratchford for the Benefit of Maranda C. Ratchford,
Judith Reiss, individually and on behalf of the
Estate of Joshua Scott Reiss, Joyce Ann Rodak,
individually and on behalf of the Estate of John M.
Rodak, Chelsea Nicole Rodak, Joyce Ann Rodak for
the Benefit of Devon Marie Rodak, John Rodak,
Regina Rodak, Joanne Gori, Diane Romero,
individually and on behalf of the Estate of Elvin
Romero, Loren Rosenthal, individually and on behalf
of the Estate of Richard Rosenthal, Expedito
Santillian, individually and on behalf of the Estate of
Maria Theresa Santillian, Ester Santillian, Ellen
Saracini, individually and on behalf of the Estate of
Victor Saracini, Guardian of Anne C. Saracini,
Joanne Renzi, Paul Schertzer, individually and on
behalf of the Estate of Scott Schertzer, Ronald S.
Sloan, individually and on behalf of the Estate of
Paul K. Sloan, Estate of George Eric Smith,
Raymond Smith, Katherine Soulas, individually and
on behalf of the Estate of Timothy P. Soulas, Russa
Steiner, individually and on behalf of the Estate of
William R. Steiner, Angela S. Stergiopoulos,
individually and on behalf of the Estate of Andrew
Stergiopoulos, George Stergiopoulos, individually
and on behalf of the Estate of Andrew Stergiopoulos,
Sandra Straub, individually and on behalf of the
Estate of Edward W. Straub, Joan E. Tino,
xv
individually and on behalf of the Estate of Jennifer
Tino, Pamela Schiele, Christine Barton-Pence,
individually and on behalf of the Estate of
Jeanmarie Wallendorf, Estate of Meta Waller, Doyle
Raymond Ward, individually and on behalf of the
Estate of Timothy Raymond Ward, Gerald Bingham,
Alice Carpeneto, Stephen L. Cartledge, Michelle
Wright, Haomin Jian, Fumei Chien, Huichun Jian,
Huichuan Jian, Hui-Chien Chen, Hui-Zon Jian,
Michael Loguidice, Ralph S. Maerz, Martin Panik,
Estate of Linda Ellen Panik, Mary Lynn-Anna Panik
Stanley, Helen Rosenthal, Alexander Rowe, Ed
Russin, Gloria Russin, Barry Russin, Leonard
Zeplin, Leona Zeplin, Joslin Zeplin, Respondents
Jenny Rubin, Deborah Rubin, Stuart E. Hersh,
Renay Frym, Noam Rozenman, Elena Rozenman,
Tzvi Rozenman, Daniel Miller, Abraham Mendelson,
Respondents
Assa
Corporation,
Respondents
Assa
Company
Limited,
xvi
RULE 29.6 STATEMENT
The Alavi Foundation is a not-for-profit
corporation organized under the laws of New York.
The Alavi Foundation has no parent corporation,
and no publicly-held corporation owns 10% or more
of its stock.
The 650 Fifth Avenue Company is a
partnership organized under the laws of New York.
The 650 Fifth Avenue Company has no parent
corporation, and no publicly-held corporation owns
10% or more of its stock.
xvii
TABLE OF CONTENTS
Page
QUESTION PRESENTED ......................................... i
PARTIES TO THE PROCEEDING........................... ii
RULE 29.6 STATEMENT....................................... xvi
TABLE OF APPENDICES ..................................... xix
TABLE OF AUTHORITIES ................................... xxi
OPINIONS BELOW................................................... 1
JURISDICTION......................................................... 1
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED ................................ 1
INTRODUCTION ...................................................... 2
STATEMENT OF THE CASE .................................. 5
I.
Statutory Background........................................ 5
II.
The Parties ......................................................... 9
III. Proceedings Below ........................................... 11
REASONS FOR GRANTING THE PETITION ...... 13
I.
The Decision Below Creates a Circuit
Split Concerning the Proper
Interpretation of the TRIA .............................. 13
A. All Other Courts Considering
TRIA Claims Against Alleged
“Agencies or Instrumentalities” of
Foreign State Sponsors of Terrorism
Have Applied the FSIA’s Definition .......... 14
xviii
B. The Second Circuit Articulated an
Unprecedented Definition of “Agency
or Instrumentality” under the TRIA ......... 16
II.
This Case Raises the Important Federal
Question as to the TRIA Definition of an
“Agency or Instrumentality”............................ 19
A. The FSIA’s Definition of “Agency or
Instrumentality” Governs the TRIA
Where the Terrorist Party at Issue Is
a Foreign State ........................................... 19
B. Even If the FSIA’s Definition Does
Not Apply, the TRIA Must Be Read in
Context........................................................ 21
1. The Court Below Disregarded the
Statutory Context of the TRIA and the
FSIA.......................................................... 22
2. The Court Below Disregarded the Settled
Meaning of “Agency or Instrumentality”
as a Legal Term of Art ............................. 26
3. The Court Below Disregarded the
TRIA’s Legislative History ...................... 29
C. The Second Circuit’s Interpretation of
the TRIA Raises Serious
Constitutional Concerns............................. 31
III. This Case is the Ideal Vehicle for
Resolving These Important Issues .................. 36
CONCLUSION......................................................... 39
xix
TABLE OF APPENDICES
Page
Appendix A: Order and Opinion of the Court
of Appeals for the Second Circuit,
dated July 20, 2016.......................................... 1a
Appendix B: Memorandum Opinion and Order
of the United States District Court for
the Southern District of New York
Granting Motions for Summary
Judgment, dated April 18, 2014 .................... 77a
Appendix C: Memorandum Opinion and Order
of the United States District Court for
the Southern District of New York
Granting Motions for Summary
Judgment, dated March 28, 2014.................158a
Appendix D: Order of the Court of Appeals
for the Second Circuit Denying Panel
Rehearing or Rehearing En Banc,
dated September 28, 2016 ............................239a
Appendix E: Order of the Court of Appeals for
the Second Circuit Staying the Mandate,
dated October 21, 2016 .................................257a
Appendix F: Constitutional and Statutory
Provisions ......................................................275a
Appendix G: Settlement Agreement between
U.S. Department of the Treasury’s Office
of Foreign Assets Control and HSBC
Holdings plc, dated December 11, 2012 .......278a
xx
Page
Appendix H: Deferred Prosecution Agreement
among U.S. Department of Justice,
HSBC Bank USA, N.A., and HSBC
Holdings plc, dated December 11, 2012 .......297a
Appendix I: Settlement Agreement between
U.S. Department of the Treasury’s Office
of Foreign Assets Control and Barclays
Bank PLC, dated August 18, 2010 ...............376a
Appendix J: Deferred Prosecution Agreement
between U.S. Department of Justice
and Barclays Bank PLC, dated
August 16, 2010 ............................................389a
Appendix K: Settlement Agreement between
U.S. Department of the Treasury’s Office
of Foreign Assets Control and Credit
Suisse AG, dated December 16, 2009...........430a
Appendix L: Deferred Prosecution Agreement
between U.S. Department of Justice
and Credit Suisse AG, dated
December 16, 2009........................................447a
xxi
TABLE OF AUTHORITIES
Page(s)
Cases
Bank Markazi v. Peterson,
136 S. Ct. 1310 (2016)............................................7
Bennett v. Islamic Republic of Iran,
825 F.3d 950 (9th Cir. 2016)..........................14, 37
BMW of N. Am. v. Gore,
517 U.S. 559 (1996)..............................................32
Calderon-Cardona v. Bank of N.Y.
Mellon,
770 F.3d 993 (2d Cir. 2014) .................................20
Cooper Indus. v. Leatherman Tool
Group, Inc.,
532 U.S. 424 (2001)..................................32, 34, 36
Edison v. Douberly,
604 F.3d 1307 (11th Cir. 2010)............................29
Firstar Bank, N.A. v. Faul,
253 F.3d 982 (7th Cir. 2001)................................26
Gates v. Syrian Arab Rep.,
No. 11 Civ. 8715, 2013 U.S. Dist.
LEXIS 45327 (N.D. Ill. Mar. 29,
2013).....................................................................16
Gottlieb v. Carnival Corp.,
436 F.3d 335 (2d Cir. 2006) .................................22
xxii
Green v. City of New York,
465 F.3d 65 (2d Cir. 2006) .............................23, 29
Griffin v. Oceanic Contractors,
458 U.S. 564 (1982)..............................................25
Gustafson v. Alloyd Co.,
513 U.S. 561 (1995)........................................22, 23
Hausler v. JP Morgan Chase Bank,
N.A.,
845 F. Supp. 2d 553 (S.D.N.Y. 2012),
rev’d on other grounds, 770 F.3d 207
(2d Cir. 2014) .......................................................16
INS v. St. Cyr,
533 U.S. 289 (2001)..............................................35
Jarecki v. G.D. Searle & Co.,
367 U.S. 303 (1961)..............................................23
Lebron v. Nat’l R.R. Passenger Corp.,
513 U.S. 374 (1995)..............................................28
Levin v. Bank of New York,
No. 09 Civ. 5900, 2011 U.S. Dist.
LEXIS 23779 (S.D.N.Y. Mar. 4,
2011).....................................................................15
Logue v. United States,
412 U.S. 521 (1973)..................................25, 27, 28
Molzof v. United States,
502 U.S. 301 (1992)........................................26, 29
xxiii
Penn Dairies, Inc. v. Milk Control
Comm’n,
318 U.S. 261 (1943)..............................................28
Reconstruction Fin. Corp. v. J.G.
Menihan Corp.,
312 U.S. 81 (1941)................................................28
Republic of Arg. v. NML Capital, Ltd.,
134 S. Ct. 2250 (2014)............................................5
Rose v. Long Island R. Pension Plan,
828 F.2d 910 (2d Cir. 1987) .................................27
Rust v. Sullivan,
500 U.S. 173 (1991)..............................................31
Schaefer v. Transp. Media, Inc.,
859 F.2d 1251 (7th Cir. 1988)........................27, 29
St. Louis, I. M. & S. R. Co. v. Williams,
251 U.S. 63 (1919)..........................................32, 34
Stansell v. Revolutionary Armed Forces
of Colombia,
771 F.3d 713 (11th Cir. 2014)...................... passim
Stansell v. Revolutionary Armed Forces
of Colombia,
No. 09 Civ. 2308, Dkt. No. 327 (M.D.
Fl. Sept. 6, 2011) ............................................15, 18
State Farm Mut. Auto. Ins. Co. v.
Campbell,
538 U.S. 408 (2003)........................................32, 34
xxiv
Sullivan v. Stroop,
496 U.S. 478 (1990)..................................22, 23, 25
United States v. Bajakajian,
524 U.S. 321 (1998)..............................................32
United States v. Costello,
666 F.3d 1040 (7th Cir. 2012)..............................23
United States v. Esquenazi,
752 F.3d 912 (11th Cir. 2014)........................27, 28
United States v. Kirby,
74 U.S. 482 (1869)................................................25
United States v. New Mexico,
455 U.S. 720 (1982)..............................................28
Verlinden B.V. v. Cent. Bank of Nig.,
461 U.S. 480 (1983)................................................6
Volloldo v. Ruz,
No. 14-mc-0025, 2016 U.S. Dist.
LEXIS 1410 (N.D.N.Y. Jan. 7, 2016) ..................16
W. Va. Univ. Hosps. v. Casey,
499 U.S. 83 (1991)................................................26
Weininger v. Castro,
462 F. Supp. 2d 457 (S.D.N.Y. 2006) ..................16
Weinstein v. Islamic Rep. of Iran,
609 F.3d 43 (2d Cir. 2010) .....................................8
Constitutional Provisions
U. S. Const., amend. V ......................................1, 2, 31
xxv
Statutes
28 U.S.C. § 1254 ..........................................................1
28 U.S.C. § 1330 ..........................................................6
28 U.S.C. § 1603 ................................................ passim
28 U.S.C. § 1604 ..........................................................6
28 U.S.C. § 1609 ................................................6, 7, 30
28 U.S.C. § 1610 ................................................ passim
28 U.S.C. § 2403 ..........................................................1
Other Authorities
31 C.F.R. § 560.211 ...................................................10
148 Cong. Rec. H6133 (Sept. 10, 2002) ....................30
148 Cong. Rec. S11524 (Nov. 19, 2002) ....................31
Black’s Law Dictionary (10th ed. 2014) ...................24
Executive Order No. 13,599, 77 Fed.
Reg. 6659 (Feb. 5, 2012) ................................10, 33
1
PETITION FOR A WRIT OF CERTIORARI
______________________
Petitioners Alavi Foundation and 650 Fifth
Avenue Company respectfully petition for a writ of
certioriari to review the judgment of the United
States Court of Appeals for the Second Circuit.
OPINIONS BELOW
The opinion of the court of appeals (App. 1a76a) is reported at 830 F.3d 107 (2d Cir. 2016). The
opinions of the United States District Court for the
Southern District of New York are unofficially
reported at 2014 U.S. Dist. LEXIS 42531 (App. 158a238a) and 2014 U.S. Dist. LEXIS 54412 (App. 77a157a).
JURISDICTION
The judgment of the court of appeals was
entered on July 20, 2016. A timely petition for panel
rehearing or rehearing en banc was denied on
September 28, 2016. (App. 239a-256a.) This Court
has jurisdiction under 28 U.S.C. § 1254(1). Although
28 U.S.C. § 2403(a) may apply, the court of appeals
did not invoke that provision. The United States is
being served with this petition.
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
Relevant provisions of the Terrorism Risk
Insurance Act of 2002, 28 U.S.C. § 1610 note; the
Foreign Sovereign Immunities Act of 1976, 28 U.S.C.
§§ 1602 et seq.; and the Due Process Clause of the
2
Fifth Amendment to the U.S. Constitution, are set
forth in the Appendix. (App. 275a-277a.)
INTRODUCTION
The Terrorism Risk Insurance Act (“TRIA”),
Pub. L. No. 107–297, 116 Stat. 2322, 2337 (codified
at 28 U.S.C. § 1610 note), allows a judgment creditor
holding an unsatisfied judgment against a “terrorist
party” to collect on that judgment by executing
against and attaching the blocked assets of the
terrorist party or the blocked assets of any “agency
or instrumentality of that terrorist party.” In these
consolidated
actions,
Plaintiffs-Respondents
(“Respondents”) hold billions of dollars’ worth of
unsatisfied, terrorism-related judgments against
Iran, which has been designated as a foreign state
sponsor of terrorism. Respondents seek to execute
those judgments against the assets of PetitionersDefendants 650 Fifth Avenue Company (“Fifth
Avenue Company”), a New York-based real estate
partnership, and Alavi Foundation (“Alavi”), a New
York not-for-profit corporation that is the majority
partner in the Fifth Avenue Company (together,
“Petitioners”).
Petitioners were neither parties to the
underlying actions against Iran nor involved in any
terrorist activity. Nonetheless, Respondents seek
turnover of Petitioners’ assets on the theory that
Petitioners are “agencies or instrumentalities” of
Iran within the meaning of the TRIA. Respondents
allege that Petitioners provided services to Iran
because the minority partner in the Fifth Avenue
Company, a New York corporation called Assa
3
Corporation (“Assa”), was owned or controlled by an
Iranian bank and Petitioners allegedly provided
partnership and property management services to
Assa. The question presented here is whether
Petitioners—who, as a matter of law, are not
“agencies or instrumentalities” of Iran under the
Foreign Sovereign Immunities Act (“FSIA”), within
which the TRIA is codified—may nevertheless be
deemed Iran’s “agencies or instrumentalities” under
the TRIA merely by virtue of having provided such
services.
In this case, the Court of Appeals for the
Second Circuit determined that an entity need only
“provide[] material services” to a terrorist party in
order
to
be
considered
its
“agency
or
instrumentality” under the TRIA. Thus, entities
that provide routine commercial services to a foreign
state may be held liable for that state’s terrorist
activity, regardless of whether those services had
any connection to terrorism. No other court has
applied such a sweeping definition of “agency or
instrumentality” under the TRIA. And for good
reason: the Second Circuit’s chosen definition of
“agency or instrumentality” contravenes the plain
text of the FSIA, the statutory context of the TRIA
itself, and the definitions regularly applied to the
phrase under federal law in other contexts. This
interpretation is untenable for several reasons.
First, the FSIA provides a strict definition of
“agency or instrumentality of a foreign state” that,
by its plain terms, applies in this case. The FSIA’s
definition explicitly applies to chapter 97 of Title 28
of the U.S. Code, which includes the TRIA. The
4
TRIA refers to an “agency or instrumentality” of a
“terrorist party,” which can be (1) a “terrorist,” (2) a
“terrorist organization,” or (3) a “foreign state
designated as a state sponsor of terrorism.”
Although the FSIA’s definition would not apply to
individual
terrorists
or
non-state
terrorist
organizations, where—as here—the “terrorist party”
is a “foreign state,” the FSIA’s definition of a foreign
state’s “agency or instrumentality” and the TRIA’s
definition should be coextensive. Indeed, other than
the Second Circuit in this case, every court that has
addressed TRIA claims against an alleged “agency or
instrumentality” of a foreign state has applied the
FSIA’s definition.
This definition requires the
“agency or instrumentality” to be either majorityowned by the foreign state or an “organ” of the
foreign state. As the Second Circuit held, Petitioners
do not satisfy the FSIA’s definition of an “agency or
instrumentality” of Iran. Thus, Respondents’ TRIA
claims should have been dismissed.
Second,
the
Second
Circuit’s
broad
interpretation of “agency or instrumentality” ignores
the statutory context.
The court purported to
interpret the words “agency” and “instrumentality”
according to their ordinary meanings. But the court
failed to read the statute as a whole and, instead,
read the words “agency” and “instrumentality” in
isolation. In the context of the statutory scheme, it
is clear that an “agency or instrumentality of [a]
terrorist party” must have a close relationship with
the terrorist party.
Indeed, “agency or
instrumentality” is a legal term of art that has been
consistently used in federal statutory and common
law to refer to an entity that is majority-owned by
5
the principal or subject to its control. Congress
legislated against this backdrop in drafting the
TRIA. Moreover, the legislative history of the TRIA
demonstrates that it was intended to impose liability
upon entities owned and controlled by terrorist
parties—not entities that may have provided
services to terrorist parties.
Finally, the Second Circuit’s broad definition
would yield absurd results and raise serious due
process concerns. It would subject service providers
to unbounded liability for the conduct of unrelated
terrorist parties, regardless of whether the service
provider was involved in any terrorist activity. Such
arbitrary and disproportionate liability would violate
due process. Left uncorrected, the Second Circuit’s
ruling could have ruinous consequences for
American companies with absolutely no connection
to terrorism.
This Court should grant certiorari to clarify
the scope of liability under the TRIA.
STATEMENT OF THE CASE
I.
Statutory Background
The TRIA is codified as part of the FSIA,
which “comprehensively regulat[es] the amenability
of foreign nations to suit in the United States.”
Republic of Arg. v. NML Capital, Ltd., 134 S. Ct.
2250, 2256 (2014). In an action against a foreign
state, including an agency or instrumentality of a
foreign state, the FSIA “must be applied . . . since
subject-matter jurisdiction in any such action
depends on the existence of one of the specified
6
exceptions to foreign sovereign immunity, 28 U.S.C.
§ 1330(a).” Verlinden B.V. v. Cent. Bank of Nig., 461
U.S. 480, 493 (1983). The FSIA provides that foreign
states are immune from both federal and state court
jurisdiction and from execution against their assets,
unless the plaintiff can demonstrate that an
exception set forth in the statute applies. See 28
U.S.C. §§ 1604, 1609.
In order to be presumptively entitled to
foreign sovereign immunity, an entity must qualify
as a “foreign state” within the meaning of the
statute’s “Definitions” section, 28 U.S.C. § 1603. The
FSIA’s definitions apply “[f]or purposes of this
chapter,” i.e., chapter 97 of Title 28 of the U.S. Code,
which includes both the FSIA and the TRIA. Id.
§ 1603.
FSIA § 1603(a) provides that “[a] ‘foreign
state’ . . . includes a political subdivision of a foreign
state or an agency or instrumentality of a foreign
state as defined in subsection (b).” Id. § 1603(a).
Section 1603(b), in turn, defines an “agency or
instrumentality of a foreign state” as any entity:
(1) which is a separate legal
person, corporate or otherwise, and
(2) which is an organ of a foreign
state or political subdivision
thereof, or a majority of whose
shares or other ownership interest
is owned by a foreign state or
political subdivision thereof, and
7
(3) which is neither a citizen of a
State of the United States as
defined in section 1332(c) and (e) of
this title, nor created under the
laws of any third country.
Id. § 1603(b). An entity must fulfill all three
requirements in order to qualify as an “agency or
instrumentality” entitled to sovereign immunity.
With limited exceptions not relevant here, a foreign
state is immune from attachment and execution
unless an exception to sovereign immunity applies.
See id. § 1609.
In 2002, Congress enacted the TRIA. See Pub.
L. No. 107-297, 116 Stat. 2322, 2337. Section 201 of
the TRIA was intended to address impediments that
terrorism victims faced in enforcing judgments
against foreign state sponsors of terrorism and other
terrorist parties. See Bank Markazi v. Peterson, 136
S. Ct. 1310, 1318 (2016). It states:
Notwithstanding
any
other
provision of law . . . in every case in
which a person has obtained a
judgment against a terrorist party
on a claim based upon an act of
terrorism, or for which a terrorist
party is not immune under section
1605A or 1605(a)(7) . . . , the
blocked assets of that terrorist
party (including the blocked assets
of any agency or instrumentality of
that terrorist party) shall be subject
to execution or attachment in aid of
8
execution in order to satisfy such
judgment to the extent of any
compensatory damages for which
such terrorist party has been
adjudged liable.
28 U.S.C. § 1610 note (emphasis added). Thus, the
TRIA permits a terrorism-related judgment creditor
to execute against the “blocked assets” of a terrorist
party,1 including the blocked assets of its “agencies
or instrumentalities.” Id. “The effect of the TRIA
. . . was simply to render a judgment more readily
enforceable against a related third party.” Weinstein
v. Islamic Rep. of Iran, 609 F.3d 43, 51 (2d Cir. 2010)
(emphasis added).
The TRIA defines a “terrorist party” as: (1) a
“terrorist,” (2) a “terrorist organization,” or (3) a
“foreign state designated as a state sponsor of
terrorism.” 28 U.S.C. § 1610 note. Thus, it applies
to both state actors and non-state actors that are
involved in terrorist activity. With respect to state
actors that are presumptively entitled to foreign
sovereign immunity under the FSIA, the TRIA
abrogates execution immunity for the purposes of
enforcing terrorism-related judgments against
foreign state sponsors of terrorism and their
agencies or instrumentalities.
The TRIA defines “blocked assets” as “any asset seized
or frozen by the United States under” the International
Emergency Economic Powers Act or the Trading With the
Enemy Act. 28 U.S.C. § 1610 note.
1
9
II.
The Parties
Alavi is a New York not-for-profit corporation
that was organized over forty years ago with a
charitable mission of promoting Islamic culture and
the study of Persian language, literature, and
civilization in the United States. The Fifth Avenue
Company is a New York partnership formed in 1989
for the purpose of holding title to an office building
located at 650 Fifth Avenue in midtown Manhattan
(the “Building”). Alavi was the sole owner of the
Building until 1989, when it transferred its interest
to the Fifth Avenue Company in exchange for a
majority interest in the partnership. Alavi is now
the 60% partner of the Fifth Avenue Company. Its
partner, Assa, is the owner of the remaining 40%
interest. Alavi serves as managing partner of Fifth
Avenue
Company
and
provides
building
management services to the partnership.
In December 2008, the U.S. Government
instituted a civil forfeiture action seeking to forfeit
property owned by Assa and Bank Melli, an Iranian
bank found to be the undisclosed owner of Assa. The
Government alleged that Assa and Bank Melli
violated the International Emergency Economic
Powers Act (“IEEPA”), 50 U.S.C. § 1701 et seq., and
the federal money laundering statutes, 18 U.S.C.
§§ 1956 and 1957, and that Assa is a front for Bank
Melli.
In November 2009, the Government filed an
amended complaint that added Alavi’s and the Fifth
Avenue Company’s properties as additional
defendants-in-rem.
It alleged that Petitioners’
assets were subject to forfeiture because Petitioners
10
provided services to Assa in violation of IEEPA,
including managing the partnership and its main
asset, the Building, on behalf of the partnership and
indirectly Assa.
Following the filing of the initial forfeiture
complaint, from 2009 to 2013, Respondents brought
these private actions in the Southern District of New
York seeking to execute outstanding judgments they
had obtained against Iran (the “Iran Judgments”).
Respondents acknowledged that neither Alavi nor
the Fifth Avenue Company was a party to or in any
way involved in the underlying actions in which the
Iran Judgments were entered.
Nonetheless,
Respondents claimed that Petitioners should be
deemed the “foreign state” of Iran or an “agency or
instrumentality” of Iran under the FSIA and the
TRIA because Petitioners allegedly provided services
to and were alter egos of Iran. Respondents sought
turnover of Petitioners’ properties in partial
satisfaction of the Iran Judgments.2
The private
Respondents’ actions were consolidated with each
In support of their TRIA claims, Respondents allege
that Petitioners’ assets are blocked under IEEPA through
Executive Order No. 13,599, 77 Fed. Reg. 6659 (Feb. 5,
2012).
That Order states that “[a]ll property and
interests in property of the Government of Iran, including
the Central Bank of Iran, that are in the United States
. . . are blocked . . . .” Id.; see also 31 C.F.R. § 560.211
(implementing blocking order). The Order defines the
“Government of Iran” to mean the “Government of Iran,
any political subdivision, agency, or instrumentality
thereof . . . and any person owned or controlled by, or
acting for or on behalf of, the Government of Iran.” Exec.
Order No. 13,599.
2
11
other and with the Government’s civil forfeiture
action.
III.
Proceedings Below
In April 2014, after having granted forfeiture
of the vast majority of Petitioners’ properties, the
District Court granted summary judgment to
Respondents on their turnover claims. (App. 77a157a.) It held that Petitioners “are” the “foreign
state” of Iran and “agencies or instrumentalities” of
Iran under both the FSIA and the TRIA. The
District Court granted turnover of all of Petitioners’
properties in partial satisfaction of the Iran
Judgments. After entry of partial final judgment,
Petitioners appealed.
On July 20, 2016, the Second Circuit issued
two lengthy decisions reversing the District Court’s
summary judgment orders in the forfeiture and
turnover actions. As to Respondents’ FSIA claims,
the court ruled as a matter of law that (1) Petitioners
do not qualify as the “foreign state” of Iran,
(2) Petitioners do not qualify as “agencies or
instrumentalities” of Iran, and (3) Petitioners do not
qualify as “alter egos” of Iran. (Id. at 40a, 45a, 51a.)
Accordingly, Respondents’ FSIA claims failed. (Id.
at 75a.)
As to Respondents’ TRIA claims, the Second
Circuit ruled that Petitioners do not qualify, as a
matter of law, as Iran in its capacity as a “foreign
state designated as a state sponsor of terrorism.”
(Id. at 54a.) In so concluding, the court relied upon
the definition of a “foreign state” under FSIA
§ 1603(a). (Id. at 52a.) However, despite the Second
12
Circuit’s conclusion that Petitioners do not qualify as
“agencies or instrumentalities” of Iran under the
FSIA, the court ruled that Petitioners’ status as
“agencies or instrumentalities” of Iran under the
TRIA is not foreclosed as a matter of law. (Id. at
64a-65a.) The court held that § 1603(b)’s definition
of “agency or instrumentality of a foreign state” does
not apply in determining whether an entity is an
“agency or instrumentality of [a foreign state
designated as a state sponsor of terrorism]” for TRIA
purposes. (Id. at 59a-60a.) Instead, the court looked
to the dictionary for the supposed “ordinary
meanings”
of
the
terms
“agency”
and
“instrumentality” and concluded that an entity could
qualify for such status under the TRIA if it: “(1) was
a means through which a material function of the
terrorist party is accomplished, (2) provided material
services to, on behalf of, or in support of the terrorist
party, or (3) was owned, controlled, or directed by
the terrorist party.” (Id. at 60a, 62a.) The Second
Circuit remanded the matter to the District Court
for further proceedings to resolve the question
whether Petitioners meet this three-prong standard.
(Id. at 76a.)
On August 17, 2016, Petitioners sought panel
rehearing or rehearing en banc, arguing that FSIA
§ 1603(b)’s definition of “agency or instrumentality of
a foreign state” should be applied to TRIA claims
against alleged agencies or instrumentalities of
foreign state sponsors of terrorism, or alternatively,
that the Second Circuit’s definition should be
substantially narrowed. The Second Circuit denied
Petitioners’ request on September 28, 2016. (Id. at
239a-256a.)
13
REASONS FOR GRANTING THE PETITION
The Second Circuit’s holdings in this case
warrant this Court’s review.
The court’s
interpretation of the TRIA has created a circuit split
concerning the proper definition of “agency or
instrumentality of [a] terrorist party” as applied to
foreign state sponsors of terrorism. All other courts
that have addressed this issue have applied the
narrow FSIA definition of “agency or instrumentality
of a foreign state”; in contrast, the Second Circuit
invented a novel definition that sweeps in unrelated
service providers that would not be considered
“agencies or instrumentalities” under the FSIA or
any number of other federal legal regimes. This
Court should clarify that the FSIA’s definition
controls where foreign state terrorist parties are
concerned. This narrower interpretation of the TRIA
would avoid the serious constitutional questions
raised by the Second Circuit’s sweeping definition.
This Court should grant review in order to address
this important federal question.
I.
The Decision Below Creates a
Circuit Split Concerning the Proper
Interpretation of the TRIA
The Second Circuit’s three-prong definition of
an “agency or instrumentality of [a] terrorist party”
under the TRIA conflicts with all existing precedent.
This Court should grant certiorari in order to resolve
this Circuit split.
14
A.
All Other Courts Considering
TRIA Claims Against Alleged
“Agencies or Instrumentalities” of
Foreign State Sponsors of
Terrorism Have Applied the FSIA’s
Definition
The Second Circuit’s interpretation of “agency
or instrumentality” under the TRIA conflicts with
the rulings of other courts, which consistently have
applied FSIA § 1603(b)’s definition in TRIA cases
concerning foreign state sponsors of terrorism. The
Ninth Circuit, for instance, recently employed
§ 1603(b)’s definition of “agency or instrumentality of
a foreign state” in its TRIA analysis concerning an
alleged agency or instrumentality of Iran.
In
Bennett v. Islamic Republic of Iran, 825 F.3d 950
(9th Cir. 2016), the plaintiffs sought turnover of
assets belonging to Bank Melli in satisfaction of
their judgment against Iran. The Ninth Circuit
relied on Bank Melli’s admission that it was an
“instrumentality” of Iran within the meaning of the
FSIA to hold that Bank Melli’s assets were
attachable pursuant to both the FSIA and the TRIA.
See id. at 957-58. The court did not perform a
separate analysis of whether Bank Melli constituted
an “agency or instrumentality” of Iran under the
TRIA, effectively holding that the FSIA definition
controls for both statutes.
Similarly, in Stansell v. Revolutionary Armed
Forces of Colombia, 771 F.3d 713, 732 (11th Cir.
2014), the Eleventh Circuit stated that applying
FSIA § 1603(b)’s definition of an “agency or
instrumentality of a foreign state” is “feasible” in
15
TRIA cases in which the terrorist party is a foreign
state sponsor of terrorism. In fact, the district court
in Stansell recognized that the FSIA’s definition
would have applied to the TRIA claims if the
relevant terrorist party had been a foreign state. See
Stansell v. Revolutionary Armed Forces of Colombia,
No. 09 Civ. 2308, Dkt. No. 327, at 5 n.5 (M.D. Fl.
Sept. 6, 2011) (“The TRIA is not limited to the
definition of ‘agency or instrumentality’ under the
definition applicable to foreign state sponsors of
terrorism found in the [FSIA] because state sponsors
of terrorism are only one type of specifically defined
types of ‘terrorist party’ under the TRIA.”) (emphasis
added). However, the relevant terrorist party in
Stansell was not a foreign state. The Eleventh
Circuit recognized that the FSIA’s definition of an
“agency or instrumentality of a foreign state” would
have to be “tweak[ed]” in order to be applied to an
agency or instrumentality of a non-state terrorist
organization. 771 F.3d at 730. It ultimately applied
a definition of “agency or instrumentality” that was
much narrower than the Second Circuit’s definition.
See id. at 730-31; see also infra at 17-18.
Finally, a number of district courts have had
occasion to address TRIA claims against alleged
“agencies or instrumentalities” of foreign state
sponsors of terrorism, and they have unanimously
applied FSIA § 1603(b)’s definition of that phrase.
See Levin v. Bank of New York, No. 09 Civ. 5900,
2011 U.S. Dist. LEXIS 23779, at *75 (S.D.N.Y. Mar.
4, 2011) (holding that bank account was subject to
execution under the TRIA because “[s]tate-owned
central banks indisputably are included in the
§ 1603(b) definition of ‘agency or instrumentality’”);
16
Volloldo v. Ruz, No. 14-mc-0025, 2016 U.S. Dist.
LEXIS 1410, at *18 n.6, *47-48 (N.D.N.Y. Jan. 7,
2016) (relying on § 1603(b) to find that Cuban
central bank is “agency or instrumentality” of Cuba
under TRIA); Gates v. Syrian Arab Rep., No. 11 Civ.
8715, 2013 U.S. Dist. LEXIS 45327, at *11-18 (N.D.
Ill. Mar. 29, 2013) (applying § 1603(b) to TRIA
claims against Syrian Central Bank); Hausler v. JP
Morgan Chase Bank, N.A., 845 F. Supp. 2d 553, 572
(S.D.N.Y. 2012) (applying § 1603(b) to TRIA claims
against Cuban banks), rev’d on other grounds, 770
F.3d 207 (2d Cir. 2014); Weininger v. Castro, 462 F.
Supp. 2d 457, 494-98 (S.D.N.Y. 2006) (applying
§ 1603(b) to TRIA claims).
The Second Circuit’s ruling broke with the
consensus of other courts that § 1603(b)’s definition
applies to TRIA claims against alleged agencies or
instrumentalities of foreign state sponsors of
terrorism.
B.
The Second Circuit Articulated an
Unprecedented Definition of
“Agency or Instrumentality” under
the TRIA
Instead of applying the FSIA definition, the
Second Circuit held that any entity that “provide[s]
material services” to a terrorist party can be deemed
its “agency or instrumentality,” regardless of
whether those services have any connection to
terrorist activity. While the Second Circuit claimed
to follow the approach in Stansell, its novel
definition swept far beyond the definition
established by the Eleventh Circuit for non-state
terrorist parties. Indeed, no other court has applied
17
such
a
broad
definition
of
instrumentality” under the TRIA.
“agency
or
In Stansell, the plaintiffs were judgment
creditors
of
the
terrorist
narco-trafficking
organization Revolutionary Armed Forces of
Colombia (or “FARC”). They asserted TRIA claims
against various individuals and entities affiliated
with FARC on the grounds that they were allegedly
“agencies or instrumentalities” of the organization.
The district court determined that the defendants
could
properly
be
deemed
“agencies
or
instrumentalities” based on their ownership or
control by the FARC or their involvement with its
criminal activities. Stansell, No. 09 Civ. 2308, Dkt.
No. 327, at 4. It stated:
Any
[Specially
Designated
Narcotics Trafficker] . . . , including
all of its individual members,
divisions and networks, that is or
was
ever
involved
in
the
cultivation,
manufacture,
processing,
purchase,
sale,
trafficking,
security,
storage,
shipment
or
transportation,
distribution of FARC coca paste or
cocaine, or that assisted the
FARC’s
financial
or
money
laundering network, is an agency
or instrumentality of the FARC
under the TRIA because it was
either:
18
(1) materially assisting in, or
providing financial or technological
support for or to, or providing
goods or services in support of, the
international narcotics trafficking
activities of . . . [FARC]; and/or
(2) owned, controlled, or directed
by, or acting for or on behalf of, . . .
[FARC]; and/or
(3) playing a significant role in
international narcotics trafficking
[related to coca paste or cocaine
manufactured or supplied by the
FARC].
Id. at 4-5. The Eleventh Circuit affirmed the district
court’s use of this definition for the non-state
terrorist organization at issue. See Stansell, 771
F.3d at 732.
The Second Circuit cited Stansell in support of
its three-prong definition of an “agency or
instrumentality of [a] terrorist party” under the
TRIA. But the court misread Stansell. The Stansell
court held that an entity may be deemed an “agency
or instrumentality” of a non-state terrorist party on
the basis that it was “owned, controlled, or directed
by, or acting on behalf” a terrorist party or
“providing goods or services in support of” the
terrorist party’s criminal activities. 771 F.3d at 724
n.6 (emphasis added).
Moreover, Stansell’s
definition has a predicate requirement that the
alleged agency or instrumentality must be “involved
19
in” the activity that caused the terrorist party to be
designated with such status. Id.
In contrast, the Second Circuit adopted a far
more expansive definition that would apply based on
the provision of services. (App. 62a.) It ignored a
critical limitation imposed by the Stansell court:
involvement in and support of unlawful activity.
Thus, there is a great disparity between the
definitions adopted by the Second and Eleventh
Circuits.
II.
This Case Raises the Important Federal
Question as to the TRIA Definition of an
“Agency or Instrumentality”
This Court should grant certiorari in order to
address the question of how to interpret the phrase
“agency or instrumentality of [a] terrorist party”
under the TRIA when the terrorist party is a foreign
state sponsor of terrorism. The Court’s guidance
here is critical, given the grave consequences of
being deemed a terrorist party’s agency or
instrumentality.
A.
The FSIA’s Definition of “Agency or
Instrumentality” Governs the TRIA
Where the Terrorist Party at Issue
Is a Foreign State
The Second Circuit erred in refusing to apply
FSIA § 1603(b)’s definition of “agency or
instrumentality” to Respondents’ TRIA claims. As
all other courts to address the issue have held, the
FSIA’s definition applies to TRIA claims where the
20
terrorist party at issue is a foreign state sponsor of
terrorism.
As explained above, the TRIA is codified as
part of the FSIA. See 28 U.S.C. § 1610 note. Courts
must read the TRIA within this “statutory context”
and interpret the FSIA “as a symmetrical and
coherent regulatory scheme.” Calderon-Cardona v.
Bank of N.Y. Mellon, 770 F.3d 993, 1000 (2d Cir.
2014) (quoting Food & Drug Admin. v. Brown &
Williamson Tobacco Corp., 529 U.S. 120, 133 (2000)).
“[D]iscordant” interpretations of the TRIA and the
FSIA must be avoided. Id. Section 1603(b) provides
a strict definition of an “agency or instrumentality of
a foreign state” which applies “[f]or purposes of this
chapter”—the U.S. Code chapter that includes the
TRIA. While the TRIA refers to an “agency or
instrumentality of [a] terrorist party,” the statute
defines “terrorist party” to include a “foreign state
designated as a state sponsor of terrorism.” 28
U.S.C. § 1610 note. Thus, the FSIA’s definition of
“agency or instrumentality of a foreign state” applies
whenever a court is determining whether an entity
is an “agency or instrumentality of [a foreign state
designated as a state sponsor of terrorism]” under
the TRIA.
Rather than following this simple mechanical
process and employing the FSIA’s definition of the
terms, the Second Circuit adopted a definition of
“agency or instrumentality” under the TRIA that is
wholly different and substantially inconsistent. The
court found that applying § 1603(b)’s definition
would “contravene a plain reading of the TRIA” since
the statute is not limited in reach to “foreign state”
21
terrorist parties. (App. 57a.) But the Second
Circuit’s ruling was not compelled by the TRIA or
the FSIA. The court overlooked the fact that, by its
plain terms, § 1603(b) applies narrowly to only one
type of terrorist party: a “foreign state.” Accordingly,
that definition only applies in determining whether
an entity is an “agency or instrumentality of a
foreign state” under the TRIA. While the panel
would not have been required to apply § 1603(b)’s
definition in a TRIA case against a non-state
terrorist party (as in Stansell), there was no valid
basis for disregarding that definition in this case,
where it does apply.
The definition of “agency or instrumentality”
established by Congress in the FSIA focuses on the
issues of majority ownership, status as an organ of a
state, and citizenship, while the Second Circuit’s
definition permits a finding of “agency or
instrumentality” status merely for “provid[ing]
material services to” a foreign state. Compare 28
U.S.C. § 1603(b) with App. 62a. As the Second
Circuit held, Petitioners do not satisfy § 1603(b)’s
definition of an “agency or instrumentality” of Iran.
(App. 45a.) Like Respondents’ FSIA claims, the
TRIA claims should be dismissed under this
standard.
B.
Even If the FSIA’s Definition Does
Not Apply, the TRIA Must Be Read
in Context
Even assuming, arguendo, that the FSIA’s
definition of “agency or instrumentality” does not
apply to the TRIA, the Second Circuit’s definition is
incorrect under the rules of statutory interpretation.
22
It is a fundamental principle of statutory
construction that statutes “should not be read as a
series of unrelated and isolated provisions.”
Gustafson v. Alloyd Co., 513 U.S. 561, 570 (1995).
Rather, “[t]he relevant phrase . . . must be read in its
entirety,” id. at 574, and “the text should be placed
in the context of the entire statutory structure.”
Gottlieb v. Carnival Corp., 436 F.3d 335, 338 (2d Cir.
2006); see also Sullivan v. Stroop, 496 U.S. 478, 482
(1990) (“In ascertaining the plain meaning of the
statute, the court must look to the particular
statutory language at issue, as well as the language
and design of the statute as a whole.”). Reading the
language of the TRIA in context, the most logical
and coherent interpretation of the statute is that it
requires an “agency or instrumentality” of a terrorist
party to have a close relationship with the terrorist
party—a relationship based on majority ownership
or control.
Indeed, principles of statutory
construction yield a definition of “agency or
instrumentality” that is substantially similar to the
FSIA definition.
1.
The Court Below Disregarded
the Statutory Context of the
TRIA and the FSIA
The Second Circuit purported to determine
the “ordinary meanings” of “agency” and
“instrumentality.” (App. 60a.) As the court noted,
dictionaries provide varying definitions of the terms.
(Id. at 61a.) The interpretive question at hand is
whether an “agency or instrumentality” under the
TRIA must be majority-owned or controlled by the
principal, or whether providing a material service to
23
the principal would suffice. While most of the
dictionary definitions of these terms suggest that a
relationship of ownership or control is required (id.),
these terms are “susceptible of more than one
meaning” and, therefore, “potentially ambiguous.”
Green v. City of New York, 465 F.3d 65, 79 (2d Cir.
2006). The Second Circuit resolved this issue by
combining the various dictionary definitions into a
three-prong test. (App. 62a.) This was error.
The Second Circuit ignored the fundamental
interpretive principle that a court cannot read the
words of a statute in isolation. See Gustafson, 513
U.S. at 570. The court should have considered the
relevant phrase in its entirety and construed the
language within the broader statutory context. See
id. at 574; Sullivan, 496 U.S. at 482; United States v.
Costello, 666 F.3d 1040, 1044 (7th Cir. 2012)
(“Dictionary definitions are acontextual, whereas the
meaning of sentences depends critically on
context . . . .”). Because the words of a statute gather
meaning from those surrounding them, the terms
“agency” and “instrumentality” should be interpreted
to have similar meanings. See Jarecki v. G.D. Searle
& Co., 367 U.S. 303, 307 (1961) (“The maxim
noscitur a sociis, that a word is known by the
company it keeps . . . is often wisely applied where a
word is capable of many meanings in order to avoid
the giving of unintended breadth to the Acts of
Congress.”). Given that an “instrumentality” is
generally considered to be a branch of the principal
that is subject to its control (App. 61a), the word
“agency” should be construed to require a similar
relationship.
24
Looking beyond the terms “agency” and
“instrumentality,” the TRIA permits execution or
attachment against “the blocked assets of [a]
terrorist party (including the blocked assets of any
agency or instrumentality of that terrorist party).”
28 U.S.C. § 1610 note (emphasis added). The statute
states that the blocked assets of the terrorist party
“includ[e]” the blocked assets of its “agency or
instrumentality,” which closely tracks § 1603(a)’s
definition of a foreign state as “including . . . an
agency or instrumentality of a foreign state.” 28
U.S.C. § 1603(a). The word “include” means “[t]o
contain as a part of something.”
Black’s Law
Dictionary (10th ed. 2014). For a terrorist party’s
assets to “include” those of its “agency or
instrumentality,” that agency or instrumentality
must be closely connected to the terrorist party such
that its assets can essentially be considered the
assets of the terrorist party itself (and, thus, fairly
subject to turnover to satisfy judgments against the
terrorist party).
Reading
the
provision
as
a
whole
demonstrates that independent service providers
cannot be deemed “agencies or instrumentalities” of
terrorist parties. It would be illogical to say that the
assets of a terrorist party “include” the assets of
unrelated entities that merely provide services to the
party. For example, one would not say that Iran’s
assets “include” the assets of Barclays Bank, HSBC,
or Credit Suisse simply because those banks
admitted to providing financial services to Iran. See
infra at 34 n.8. Rather, one would expect there to be
a close relationship between the “agency or
instrumentality” and the terrorist party in order for
25
the former’s assets to be “included” in those of the
latter. It is particularly appropriate to require a
close relationship between the two entities, given
that the statute imposes full liability upon the
“agency or instrumentality” for the terrorist party’s
wrongdoing. Federal statutes do not—and cannot
for constitutional reasons, see infra at 31-36—impose
liability for one party’s wrongdoing upon
independent entities that happen to do business with
them. See, e.g., Logue v. United States, 412 U.S. 521,
527-28 (1973) (requiring a corporation to be
controlled by the U.S. Government, as opposed to an
independent contractor, in order to be deemed an
“instrumentalit[y] or agenc[y]” whose acts could
subject the United States to liability under the
Federal Tort Claims Act).3
Further, the words of the TRIA must be read
in their broader statutory context. See Sullivan, 496
U.S. at 482. Within the FSIA statutory scheme,
which includes the TRIA, there is another provision
that uses the words “include” and “agency or
instrumentality” in close proximity—§ 1603. This
section states that a “foreign state” “includes” an
“agency or instrumentality of a foreign state.” 28
Indeed, the Second Circuit’s interpretation of the TRIA
would lead to an absurd result: the imposition of
unlimited liability against mere service providers for the
terrorist acts of unrelated parties. It is a fundamental
principle of statutory construction that “interpretations of
a statute which would produce absurd results are to be
avoided if alternative interpretations consistent with the
legislative purpose are available.” Griffin v. Oceanic
Contractors, 458 U.S. 564, 575 (1982); see also United
States v. Kirby, 74 U.S. 482, 486 (1869).
3
26
U.S.C. § 1603(a).
It requires an “agency or
instrumentality” to be closely connected to its foreign
state principal: the agency or instrumentality must
be either majority-owned by the foreign state or its
“organ.”
Id. § 1603(b).
Even assuming that
§ 1603(b)’s definition does not control the
determination of whether an entity is an “agency or
instrumentality of [a] terrorist party” under the
TRIA, it nonetheless provides valuable guidance
about Congress’s understanding of the phrase in the
statutory scheme.
2.
The Court Below Disregarded
the Settled Meaning of
“Agency or Instrumentality”
as a Legal Term of Art
The Second Circuit also failed to recognize
that “agency or instrumentality” is a legal term of
art that has been consistently interpreted with
respect to federal statutes and common law to
require majority ownership or control by the
principal.
It is a “cardinal rule of statutory
construction” that when Congress uses a term of art,
“it presumably knows and adopts the cluster of ideas
that were attached to each borrowed word . . . .”
Molzof v. United States, 502 U.S. 301, 307 (1992).
Thus, “where a word is given a consistent meaning
throughout the United States Code, then the courts
assume that it has that same meaning in any
particular instance of that word.” Firstar Bank, N.A.
v. Faul, 253 F.3d 982, 990 (7th Cir. 2001); see also W.
Va. Univ. Hosps. v. Casey, 499 U.S. 83, 88 (1991)
(reviewing the “record of statutory usage” of certain
language).
27
Congress has used the terms “agency” and
“instrumentality” together in a variety of statutory
contexts, including the FSIA. These terms have
consistently been interpreted to mean that the
principal owns a majority interest in or controls its
agency or instrumentality. See Logue, 412 U.S. at
527-28 (holding that the “critical factor” in
determining whether a corporation is an
“instrumentalit[y] or agenc[y] of the United States”
under the Federal Tort Claims Act is “the authority
of the principal to control the detailed physical
performance of the contractor”); United States v.
Esquenazi, 752 F.3d 912, 925 (11th Cir. 2014)
(holding that an “agency” or “instrumentality” of a
foreign government under the Foreign Corrupt
Practices Act means “an entity controlled by the
government of a foreign country,” such as an entity
in which the government has a “majority interest”);
Schaefer v. Transp. Media, Inc., 859 F.2d 1251, 1255
(7th Cir. 1988) (holding that an entity must be
subject to “supervisory control” by a city in order to
be considered its “agency or instrumentality” under
the Age Discrimination in Employment Act); Rose v.
Long Island R. Pension Plan, 828 F.2d 910, 918 (2d
Cir. 1987) (holding that the factors determinative of
whether an entity is an “agency or instrumentality”
of the government under the Employee Retirement
Income Security Act include “whether control and
supervision of the organization is vested in public
authority” and whether the government has “the
powers and interests of an owner”).
Similarly, the common-law meaning of the
terms “agency” and “instrumentality” requires such
an entity to be majority-owned or controlled by the
28
principal. See, e.g., Lebron v. Nat’l R.R. Passenger
Corp., 513 U.S. 374, 394-400 (1995) (holding that
Amtrak was “agency or instrumentality of the
United States” for constitutional purposes because
the government “retains for itself permanent
authority to appoint a majority of the directors” and
Amtrak
furthers
“governmental
objectives”);
Reconstruction Fin. Corp. v. J.G. Menihan Corp., 312
U.S. 81, 83 (1941) (holding that Reconstruction
Finance Corporation was an “agency” of the federal
government entitled to sovereign immunity because
the government was its “sole stockholder” and its
board of directors was appointed by the president).
Courts also have consistently held that merely
providing services to an entity is insufficient to
render the service provider an agency or
instrumentality. See, e.g., Penn Dairies, Inc. v. Milk
Control Comm’n, 318 U.S. 261, 269 (1943) (holding
that “those who contract to furnish supplies or
render services to the government” are not
“agencies” of the government entitled to its
immunity); Logue, 412 U.S. at 525-28 (holding that
county jail was not an “instrumentalit[y] or agenc[y]
of the United States” for purposes of the FTCA
merely by reason of its contract to provide services to
the federal government); United States v. New
Mexico, 455 U.S. 720, 734-35 (1982) (holding that
federal contractors that “provid[ed] services” to
government at research laboratories were not
“agenc[ies] or instrumentalit[ies]” immune from
taxation); Esquenazi, 752 F.3d at 921 n.6 (holding
that an “agency” or “instrumentality” of a foreign
government under the FCPA “exclude[s] a private
contractor not controlled or created by the state that
29
provided a service to the public”); Edison v.
Douberly, 604 F.3d 1307, 1310 (11th Cir. 2010)
(holding that a private entity is not an agency or
instrumentality of the government under the
Americans with Disabilities Act “merely because it
contracts with a public entity to provide some
service”); Schaefer, 859 F.2d at 1254 (holding that
the “mere existence of an exclusive contract” to
provide advertising services to a city does not render
the contractor an “agency or instrumentality” of the
city under the ADEA).
In drafting the TRIA, Congress legislated
against the backdrop of the entire body of federal
statutory and common law interpreting the phrase
“agency or instrumentality.” This Court should
presume that Congress incorporated the settled
meaning of these terms. See Molzof, 502 U.S. at 307.
3.
The Court Below Disregarded
the TRIA’s Legislative
History
The Second Circuit also failed to recognize
that the TRIA’s legislative history demonstrates
Congress’s intent to impose liability for terrorist acts
upon entities that are majority-owned and controlled
by the terrorist parties.4 In a floor statement, one of
the TRIA’s co-sponsors stated:
[T]errorist-sponsored states will no
longer be able to use their
A statute’s legislative history is relevant in interpreting
ambiguous language. See Green, 465 F.3d at 78.
4
30
diplomatic
and
intelligence
agencies to support terrorists with
financial impunity . . . . Terrorismsponsoring states use those wholly
owned and controlled agencies and
instrumentalities to raise, to
launder, and to distribute funds to
terrorist cells, sometimes even in
the United States of America.
Ironically, these agencies and
instrumentalities can claim foreign
sovereign
immunity
against
victims in U.S. courts because of
their
relationship
with
the
terrorist-sponsoring states.
148 Cong. Rec. H6133, H6134 (Sept. 10, 2002)
(statement of Rep. Fossella) (emphasis added). Any
ambiguity regarding the meaning of the terms
“agency or instrumentality” should be resolved in a
manner consistent with Congress’s focus on entities
“owned and controlled” by a terrorist party. Id.5
One of the drafters of the TRIA similarly
stated that the statute “operates to strip a terrorist
state of its immunity from execution or attachment
in aid of execution by making the blocked assets of
that terrorist state, including the blocked assets of
This floor statement indicates that Congress intended
FSIA § 1603(b)’s definition of “agency or instrumentality”
to apply to TRIA claims concerning foreign state sponsors
of terrorism; an entity would only be able to “claim
foreign sovereign immunity” if it satisfied § 1603(b)’s
definition of “agency or instrumentality of a foreign
state.” See 28 U.S.C. §§ 1603, 1609.
5
31
any of its agencies or instrumentalities, available for
attachment and/or execution of a judgment issued
against that terrorist state.” 148 Cong. Rec. S11524,
S11528 (Nov. 19, 2002) (statement of Sen. Harkin).
Congress viewed the imposition of liability upon an
“agency or instrumentality” of a terrorist state as
stripping the terrorist state of “its” immunity,
strongly suggesting that the entities must be closely
related. Id. The TRIA would not strip a terrorist
state of “its” immunity if the statute permitted the
execution of judgments against unrelated service
providers.
There is no indication in the TRIA’s legislative
history that Congress intended to subject service
providers to liability for the wrongdoing of unrelated
terrorist parties. Rather, the statute’s legislative
history demonstrates that Congress used the phrase
“agency or instrumentality of [a] terrorist party”
with the intent that judgment creditors would be
able to execute against the assets of an entity that is
majority-owned or controlled by the terrorist party
against which the judgment was entered.
C.
The Second Circuit’s Interpretation
of the TRIA Raises Serious
Constitutional Concerns
The Second Circuit’s expansive interpretation
of “agency or instrumentality” under the TRIA runs
afoul of the Due Process Clause because it
arbitrarily subjects entities with no connection to
terrorist activity to unbounded liability for the
wrongdoing of an unrelated terrorist party. The
TRIA must be construed more narrowly to avoid this
serious constitutional concern. See Rust v. Sullivan,
32
500 U.S. 173, 190-91 (1991) (“[A] statute must be
construed, if fairly possible, so as to avoid not only
the conclusion that it is unconstitutional but also
grave doubts upon that score.”).
Due process prohibits “irrational and
arbitrary” deprivations of property, State Farm Mut.
Auto. Ins. Co. v. Campbell, 538 U.S. 408, 429 (2003),
including the imposition of “grossly excessive”
liability on tortfeasors. BMW of N. Am. v. Gore, 517
U.S. 559, 562 (1996).6 In the context of punitive
damages, this Court has limited such awards based
on the following factors: “(1) the degree of the
defendant’s reprehensibility or culpability, (2) the
relationship between the penalty and the harm to
the victim caused by the defendant’s actions, and
(3) the sanctions imposed in other cases for
comparable misconduct.”
Cooper Indus. v.
Leatherman Tool Group, Inc., 532 U.S. 424, 435
(2001) (citations omitted). Similarly, this Court has
held that there are due process limitations on
statutory
damages.
Such
awards
are
unconstitutional where they are “so severe and
oppressive as to be wholly disproportioned to the
offense and obviously unreasonable.” St. Louis, I. M.
& S. R. Co. v. Williams, 251 U.S. 63, 67 (1919).
Likewise, due process necessarily limits Congress’s
authority to impose liability upon third parties that
Cf. United States v. Bajakajian, 524 U.S. 321, 334
(1998) (holding that the Eighth Amendment’s Excessive
Fines Clause prohibits punitive forfeitures that are
“grossly disproportional to the gravity of a defendant’s
offense”).
6
33
had no involvement in an underlying wrongdoing
that gave rise to a judgment.
The Second Circuit’s interpretation of the
TRIA, however, provides no reasonable limitation on
liability. The TRIA permits a judgment creditor to
satisfy any compensatory damages component of its
judgment against a terrorist party by executing
against all blocked assets of an “agency or
instrumentality” of that terrorist party.7 Under this
interpretation, therefore, a service provider to Iran
could be subjected to unlimited liability based only
on a determination that its services were “material.”
Moreover, the Second Circuit made clear that an
entity would be considered to be providing services
to Iran indirectly if the entity provided services to an
agency or instrumentality of Iran. (App. 63a (“Bank
Melli owned and controlled Assa . . . such that Alavi
was providing services to Bank Melli (and, therefore,
Iran) . . . .”) (emphasis added).) In other words, the
court ruled that Alavi could be deemed an “agency or
instrumentality” of Iran for providing services to
Assa, which is allegedly owned by Bank Melli, which
is owned by Iran. Such an attenuated connection to
the Iranian government would be sufficient to
subject Alavi to billions of dollars in liability for
Iran’s terrorist activity.
Though the TRIA permits a judgment creditor to recover
only against “blocked assets,” such a limitation is
meaningless where Iran is concerned. Under the Second
Circuit’s ruling, all assets of the “Government of Iran,”
which includes any “agency, or instrumentality” of Iran or
any person acting on its behalf, are automatically blocked
under Executive Order No. 13,599. (App. 70a, 74a.)
7
34
The Second Circuit’s standard fails to meet
constitutional muster. It does not take into account
the reprehensibility of the service provider’s conduct,
whether there is any connection between the
services and the harm to the victim, or whether the
deprivation of property would be excessive in light of
the nature of the services provided. See Cooper, 532
U.S. at 435; Williams, 251 U.S. at 66-67. It would
impose unlimited liability upon entities that are not
related to Iran and that had no involvement in
terrorist activity simply for providing services to
Iran or its agency or instrumentality. Such a
deprivation of property would be arbitrary,
disproportionate, and grossly excessive, in violation
of due process. See State Farm, 538 U.S. at 416, 429;
Williams, 251 U.S. at 66-67.
The threat of arbitrary and disproportionate
property deprivations is not just theoretical. The
Second Circuit’s ruling could have ruinous
consequences for individuals and companies that
have provided routine commercial services to Iran,
given the literally tens of billions of dollars of
outstanding terrorism-related judgments against
Iran. Under the Second Circuit’s ruling, the assets
of a number of major banks would be subject to
turnover, given that they have admitted to providing
services to Iran in violation of Treasury Department
regulations.8 The court’s interpretation of the TRIA
See, e.g., Settlement Agreement between U.S.
Department of the Treasury’s Office of Foreign Assets
Control (“OFAC”) and Credit Suisse AG (Dec. 16, 2009)
(App. 430a-446a); Deferred Prosecution Agreement
between U.S. Department of Justice (“DOJ”) and Credit
Suisse AG (Dec. 16, 2009) (id. at 447a-491a); Settlement
8
35
could also generate a flood of litigation against
American
companies
that
provide
online
communication services. Cf. Force v. Facebook, Inc.,
No. 16 Civ. 5158, Dkt. No. 1, ¶ 1 (E.D.N.Y.)
(complaint asserting Antiterrorism Act claims
against Facebook for allegedly “provid[ing] material
support” to Hamas, a terrorist organization, in the
form of social networking services). And in this case,
Respondents could potentially obtain turnover of all
of Petitioners’ assets, merely because Petitioners
allegedly provided partnership and management
services to themselves and Assa.
In order to avoid this constitutionally
impermissible outcome, the Court should clarify that
the TRIA must be construed more narrowly. See
INS v. St. Cyr, 533 U.S. 289, 299-300 (2001) (“[I]f an
otherwise acceptable construction of a statute would
raise serious constitutional problems, and where an
alternative interpretation of the statute is fairly
possible, we are obligated to construe the statute to
avoid such problems.”) (citations omitted).
The
Court should impose an “agency or instrumentality”
test that requires a close relationship between the
agency or instrumentality and the terrorist party—
namely, a relationship of majority ownership or
control. Such a standard would not violate due
Agreement between OFAC and Barclays Bank PLC (Aug.
18, 2010) (id. at 376a-388a); Deferred Prosecution
Agreement between DOJ and Barclays Bank PLC (Aug.
16, 2010) (id. at 389a-429a); Settlement Agreement
between OFAC and HSBC Holdings plc (Dec. 11, 2012)
(id. at 278a-296a); Deferred Prosecution Agreement
among DOJ, HSBC Bank USA, N.A., and HSBC Holdings
plc (Dec. 11, 2012) (id. at 297a-375a).
36
process because the entity being subjected to liability
would essentially be a part of the terrorist party
found to have committed grave wrongdoing in the
underlying action. See Cooper, 532 U.S. at 435
(considering the defendant’s “reprehensibility”).
Thus, the entity could fairly be held liable for the
terrorist party’s wrongdoing.
III.
This Case is the Ideal Vehicle for
Resolving These Important Issues
This case presents an ideal vehicle for the
Court to clarify the scope of the TRIA because the
facts exemplify how the Second Circuit’s broad
“agency or instrumentality” test is unworkable. The
Second Circuit’s ruling provides no guidance on what
types of services may be deemed “material” and
suggests that the services need not be in any way
connected to the principal’s terrorist or unlawful
activities. This test would create uncertainty and
lead to fundamentally unfair and unconstitutional
outcomes. Service providers attempting to avoid
liability under the TRIA must now assess
(1) whether their services could be deemed
“material,” and (2) whether their customers have
any connection to a “terrorist party,” however
remote.
The problems with the Second Circuit’s
standard are borne out by the facts of this case.
Respondents allege that Alavi provided management
services to Assa in connection with a real estate
partnership. They do not allege that Alavi provided
services with any nexus to terrorist activity. Under
the Second Circuit’s test, the factfinder may
conclude that Alavi’s management of the partnership
37
constituted a “material” service that subjects Alavi
to liability under the TRIA as an “agency or
instrumentality” of Iran. The Second Circuit’s ruling
casts a cloud of uncertainty over other types of
routine commercial services, such as banking and
communication services.
Moreover, this case demonstrates the practical
problems associated with imposing TRIA liability on
entities that indirectly provide routine commercial
services to a terrorist party. The connection between
Alavi and Iran is extremely attenuated: Alavi
allegedly provided partnership management services
to Assa, which is owned by Bank Melli. Yet the
Second Circuit stated that Alavi may be deemed to
have provided services to Iran. (App. 62a.) Under
the Second Circuit’s test, a service provider would
need to investigate the ownership and business
relationships of each of its customers in order to
determine whether providing services to that
customer could somehow lead to an indirect
provision of services to a terrorist party. This test
would place an unreasonable burden on companies
having no relationship to terrorism in order to avoid
TRIA liability.
Further, this case involves a fertile area for
litigation under the TRIA and the FSIA because Iran
has a large number of creditors with billions of
dollars in unsatisfied terrorism-related judgments.
Iran’s judgment creditors have moved aggressively
to attach assets in the United States held by third
parties to recover on their judgments. See, e.g.,
Bennett, 825 F.3d at 965-66 (holding that judgment
creditors of Iran may attach and execute against
38
monies in the possession of Visa Inc. that were
contractually owed to Bank Melli).
This case
demonstrates the scope of activity that could subject
entities to the execution against and attachment of
their properties to satisfy judgments against Iran.
The Second Circuit’s ruling will surely lead to
abusive litigation against other service providers
with attenuated, at best, connections to Iran.
Finally, the interests of judicial economy
would be served by this Court’s intervention at this
stage of the litigation. This case has dragged on for
eight years and is now headed for trial on two issues:
(1) whether
Petitioners
are
“agencies
or
instrumentalities” of Iran under the TRIA, and
(2) whether Petitioners’ assets are “blocked” within
the meaning of the TRIA. It would waste the time
and resources of the District Court to try one of the
central issues in the case under an incorrect
standard. Given the confusion among the circuit
courts on the proper interpretation of the TRIA, this
Court should step in and settle the issue.
The facts of this case demonstrate that the
Second Circuit’s interpretation of the TRIA is
unworkable and that a stricter standard is needed.
This Court should grant certiorari and clarify that
an “agency or instrumentality” of a foreign state
sponsor of terrorism must satisfy FSIA § 1603(b)’s
standard or, at the very least, be majority-owned or
controlled by that foreign state. Either standard
would provide clear guidance to companies
attempting to avoid liability under the TRIA.
39
CONCLUSION
The petition for certiorari should be granted.
December 22, 2016
Respectfully submitted,
DANIEL S. RUZUMNA
Counsel of Record
MUHAMMAD U. FARIDI
DIANA M. CONNER
PATTERSON BELKNAP WEBB &
TYLER LLP
1133 Avenue of the Americas
New York, NY 10036-6710
Counsel for Petitioners